The Dark Side of Ethanol

Posted on September 19th, 2007 in Agriculture, Budget and Tax Policy, Energy, Pork by Kyle

From the NY Times:

Ethanol production in the United States and other countries, combined with bad weather and rising demand for animal feed in China, has helped push global grain prices to their highest levels in at least a decade. Earlier this year, rising prices of corn imports from the United States triggered mass protests in Mexico. The chief of the United Nations Food and Agriculture Organization has warned that rising food prices around the world have threatened social unrest in developing countries.

A recent report by the Organization for Economic Cooperation and Development, an economic forum of rich nations, called on the United States and other industrialized nations to eliminate subsidies for the production of ethanol which, the report said, is driving up food costs, threatening natural habitats and imposing other environmental costs. “The overall environmental impacts of ethanol and biodiesel can very easily exceed those of petrol and mineral diesel,” it said.

If our technology and resource levels were such that a shift to ethanol was a good idea there would be financial incentives for individuals to undertake the transition.  The fact that you need the government to hand out subsidies while requiring people to use it should be a pretty good sign that it doesn’t really make sense right now.

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An Inefficient Energy Policy

Posted on July 30th, 2007 in Agriculture, Energy, Pork by Kyle

Pete du Pont in the Wall Street Journal:

The U.S. has substantial supplies of oil and gas that could be accessed if lawmakers would allow it, but they frequently don’t. A National Petroleum Council study released last week reports that 40 billion barrels of America’s “recoverable oil reserves are off limits or are subject to significant lease restrictions”–half inshore and half offshore–and similar restrictions apply to more than 250 trillion cubic feet of natural gas. (We consume about 22 trillion cubic feet a year.)

Access to the 10 billion barrels of oil in Alaska’s Arctic National Wildlife Reserve has been prohibited for decades. Some 85 billion barrels of recoverable oil and 420 trillion cubic feet of natural gas exist on the Outer Continental Shelf, but a month ago the House again, as it did last year, voted down an amendment that would have allowed the expansion of coastal drilling for oil and natural gas. All of which leaves the U.S. as the only nation in the world that has forbidden access to significant sources of domestic energy supplies.

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“Actively engaged” is such a relative term

Posted on July 24th, 2007 in Agriculture, Pork by Kyle

Yesterday the GAO issued a report on the Department of Agriculture’s farm subsidy program.  Amongst the findings:

The U.S. Department of Agriculture distributed $1.1 billion over seven years to the estates or companies of deceased farmers and routinely failed to conduct reviews required to ensure that the payments were properly made, according to a government report.

In a selection of 181 cases from 1999 to 2005, the Government Accountability Office found that officials approved payments without any review 40 percent of the time.

The report cited a 1,900-acre soybean and corn farm in Illinois that collected $400,000 on behalf of an owner who lived in Florida before his death in 1995. The company did not notify the government of the death but certified each year that the dead shareholder, who owned 40 percent of the company, was “actively engaged” in managing the farm.

Naturally this report acted as a wake up call to the members of congress currently debating a new farm bill right?  Not exactly:

Instead, the House Agriculture Committee has produced a bill that essentially maintains current subsidy programs, with some minor tweaks billed as “reforms.” Among them is a provision that would disqualify a farmer with an annual adjusted gross income of $1 million — yes, $1 million — from receiving subsidies. That’s a pathetic five times the $200,000 cap President Bush proposed earlier this year. […]

So what is the speaker’s take on this rotten bill? It “represents a critical first step toward reform,” Ms. Pelosi said last week. That’s the wrong answer.

If that’s the first step, we’ve got a long journey ahead of us.

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